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India is among the fastest-growing markets for most global consulting firms. But a difficult economy and tougher clients, competition and project mandates are forcing consultants to raise the game, writes Vinod Mahanta
In July 2011, Gautam Adani decided to seek the help of consulting firms to engineer a complete transformation in his $7.7-billion group. One by one, CEOs of leading consulting firms flew into Sardar Vallabhbhai Patel International Airport, Ahmedabad, armed with their usual arsenal — ideas, insights and promises of „impact.‟ A lot was at stake — a fat fee, some major bragging rights and a chance to convert the assignment into a relationship that could be milked over multiple years. Gautam bhai is known to cut a tough deal and with his businesses not in the best shape, he took a good 15-16 months to decide. Finally, Booz got the nod for their corporate centre, Accenture bagged the infrastructure business, AT Kearney snagged the power part, while KPMG managed to get hold of the ports business. The consultants started work in October 2012. This engagement captured many undercurrents of change that are reshaping high-value consulting in India. Newer companies are buying consulting services; buying cycles are getting longer; consulting relationships are getting more promiscuous; competition is getting tougher, and the missing marquee names from the Adani consulting roster also indicate that clients now don‟t get taken in by the „messenger‟ but go by the messag e. With the economy slowing down, the nature of consulting is also changing. Coming off many years of easy growth, consulting firms now have to work harder to keep clients happy. The Consulting boom Twenty three years ago, when Gautam Bhai was laying down the foundation of his empire, CK Birla roped in global consulting firm McKinsey for a turnaround project for Hindustan Motors. That birthed the management consulting story in India. Since then, the consulting space has exploded — true-blue strat firms (McKinsey, BCG, Bain, AT Kearney, Booz,) straddle the top end; consulting arms of technology firms like Accenture, IBM, occupy the mid-tier, the Big Four‟s consulting arms target the mid and bottom layer of the pyramid, a handful of boutiques (Universal Consulting, Avalon Consulting etc.) fill in the niches, and some credible newcomers like Oliver Wyman and Rolland Berger are fighting for their share. “A lot of new capacity has been created over the last five years but the good thing is that it has been absorbed by
” acknowledges Arindam Bhattacharya. develop the market. including 30-40 projects that are worth about $2 million each. Others have grown too. Take Thermax. CEO. for example. The Pune-based company hired BCG in 2000 . The Client Changeth Firms are getting more traction despite the ongoing economic slowdown. Bain and AT Kearney were among the top three firms in terms of growth in their universe globally (a fact vouched for by their global CEOs. and the fragmented market and nebulous nature of work that‟s clubbed under „consulting.the market.” Under Ashish Singh‟s leadership. public sector (excluding banks). AT Kearney: “We have nearly tripled in size during the last four years. infrastructure projects. Says BCG‟s Bhattacharya: “Every year. “We are only scratching the surface in India. McKinsey is the big daddy of the Indian consulting space. BCG.” says Noshir Kaka. Global COO . But after speaking with CEOs of all major firms. That‟s a $250-300 million market. We have 13 today and 400 client-facing consultants. That. BCG. and absorb losses for nearly 10 years — paid off. Oliver Wyman India. managing director. Over half of all assignments in the last 4-5 years have come from newer clients like family-owned mid-caps. “They will squeeze you but they present a good opportunity. Booz and Co.” says Atul Khosla. the management consulting market grew at 20%-plus.” The firm‟s entry strategy — come in early (1992).” Adds Saurine Doshi. when companies were growing rapidly but were struggling to manage growth and complexity. even late entrant Bain and Co has scaled up to 17 partners and 180 consultants in just seven years — the fastest scale-up for any major consulting firm.” Even as the client mix is changing. Deloitte Touche Tohmatsu. consulting penetration remains poor in India compared with the developed markets. “The consulting spend of just the Wall Street area is multiple times the spend of many regions. Indian subsidiaries of McKinsey. “We had one director in 2003. private equity and private equity-owned companies. like India. But the nature of growth is changing. just that getting in is tough. ET reckons that between 500 and 600 high-value consulting engagements (most expensive consulting that‟s largely the domain of the strat firms) are awarded each year. MD. BCG has grown faster than the market.” says Manoj Singh. the nature of work is evolving. the new boss at McKinsey. Despite such growth. Consultants are a secretive lot. except McKinsey.” says Suvojoy Sengupta. and state governments.‟ makes it difficult to estimate the size of this business. partner and managing partner.) “The Indian firm has consistently been one of the fastest growing in the McKinsey universe over the last few years. “The midcap companies are very loyal. It‟s safe to estimate that between the gogo years of 2004-2010 (barring the 2008-09 blip).
McKinsey helped the company with integration of GCPL with Godrej Sara Lee. Thermax. Bain worked with Godrej Properties. “Earlier assignments were at company level. “The first time. “This has ensured continuity and enablement. The last decade was about insights and implementation. Godrej recently elevated ex-Bain partner Vivek Gambhir as CEO of GCPL.” adds Sengupta of Booz and Co. the premium was on ideas. “Each time we have used the consultants. now they want on-theground changes. Chairman. pure strategy kind of projects would add up to only 10% to 15% of the highvalue consulting market. “In each case. “Each time we have drilled down a level.” Gone are the times when the promoters and CEOs wanted reports or ideas or portfolio analysis. Clients want consultants to get their hands dirty. consultants led the implementation. Thermax made sure the company benefitted long term from each consulting assignment with a pollination method. MD. we have looked for specialised knowledge from the firm or a particular partner. Godrej Group. Now we are focused on making individual businesses globally competitive. we have used them for a specific reason. Clients who have worked with consultants over the years have learnt to extract best value.” he adds.” he says. and BCG consulted for Godrej and Boyce.for a portfolio analysis: the firm was into multiple businesses like finance and paints and wanted to focus on a few.”explains MS Unnikrishnan. Moreover. in the next six months. And right from the start. Take Anurag Chaudhary. we are clear about our expectations and deliverables from them. and yes. not just give them a study. “Premium is now on outcomes. In the end it became a big fat book that was lying in a corner! Now we have a team that works with the consultants and there is constant monitoring of the progress. the company hired McKinsey for help on how to grow the company by design. In 2003. The Godrej Group has been one of the most prolific buyers of consulting services. rarely can consultants quickly execute a project and scoot. Thermax is working with Accenture on business process improvement to be globally competitive.” says Kaka of Mckinsey. For example. operational excellence and an efficient supply chain management. and during the last phase. we have managed to extract value out of our engagements. So for a typical project. This decade will be about capability building. Fifteen years ago. streamlining distribution. Most recently. companies now want consultants to also help them embed the capabilities in their organisations. And now. I hired a consulting firm to do a diagnostic and the implementation was to be done by us. the first three months was a diagnostic study. company talent started replacing the consultants.” says Unnikrishnan of Thermax. Smarter clients are now demanding .” says Adi Godrej. “The 90s were about ideas and insights. better go-to-market strategies. CEO of Kolkatabased Himadri Chemicals. In fact.
how much time will the partner be able to give us.” explains Sengupta of Booz. For example. Companies are also becoming more aware of the differentiation between firms.more.“What we give in a proposal today. Earlier a firm‟s name would be enough to get projects. I need total commitment from the partner. For strategy or portfolio kind of work they might prefer a McKinsey or BCG. and a Big Four might get preference for sales distribution reorganisation. but I want to get 15-20 times returns on what I have s-pent. Asia Pacific head of BCG. when clients like Chaudhary pay the full fee. and a price value equation that‟s much more in favour of the clients drives work towards the accounting firms. “Apart from experience. large companies often split projects. the most important criterion was. partners now have to sweat harder. “A wider bouquet of services. In fact. AT Kearney is working on a cost reduction and inventory reduction project. Clients also increasingly want the consulting firm‟s skin in the game too. We make sure that we get 3-4 times value on the amount we spend. similarly Vedanta works with both McKinsey and Accenture. at the same time.” Global Glory Indians In Consulting Globally Rajat Gupta is no longer a poster boy.and low-value part of consulting. He sums it up well: “I will give you whatever you ask. now partners are becoming more important in the equation. “We have in the past linked the payments to the deliverables. Chaudhary was crystal clear about his requirements. the PE firms might choose Bain for strategic diligence. much more grounded approach. AT Kearney might get a heads-up for supply chain and operational kind of work.700 consultants in business advisory services. as a corollary. national director.” says Adi Godrej. but plenty is happening for Indian consultants . Bain and Booz to pitch for a blueprinting exercise a few months ago. the Big Four‟s consulting arms and Accenture have made big inroads in the mid. they want clear deliverables. „Am I one of the two clients the partner will work on personally?‟ is now a frequent question. used to be the end of a strategy report 10 years ago.” And. And.” says Janmejaya Sinha. Like Adani. Britannia is doing a strategy review with Bain and.” says Sunil Chandiramani. When Himadri Chemicals asked McKinsey. who leads a team of 70 partners and 2.“There is more contingency and variable pay now. Ernst and Young.
the right course of action. their value proposition is compelling. For example. we will do merger and acquisitions and things like that. GM. And at Booz and Co. Also. “For a company our size (FY11-12 revenues: 1. another Indian partner. given the wider range of services that the accounting firms can offer at much more reasonable fees. Vikas Kaushal. We will help an organisation to figure out the right strategy.878 crore). the revenue of Deloitte Consulting ($9. Vijay Vishwanathan leads the global consumer products practice while Raj Pherwani oversees the global performance improvement practice.000 consultants. Deloitte for Project Management and Ernst &Young for setting up its Personal Management Systems. At AT Kearney. Hindusthan National Glass and Industries has called the big boys of consulting to their pitches. Not only globally. but in India too the consulting arms of the Big Four are clearly back in the game. another KPMG team helped with due diligence and merger formalities. Shumeet Banerjee was the founding CEO of the firm from 2008-2012.2bn in FY12 and bigger than Mckinsey) will overtake all other revenue streams for the accounting firm in five years. Noshir Kaka is one of the longest serving members on the McKinsey‟s global partner election committee (one amongst the seven global chairs). “Our knowledge. we have tight budgets and we find working with the Big Four is more suitable compared to the big consulting firms” says Alok Taparia. At McKinsey. holds one of the top four most important jobs in the firm globally.” says Manoj Singh. we will help them with information systems. has joined him. skill sets and experience has grown over time and . the company has used PWC for SAP Implementation. and more than 200 partners in their business advisory businesses. Global COO. There are over 100 Indian origin partners in Mckinsey globally. we will help them with the proper compensation structure and things like that. Strategy Management Cell. In the past. but prefers working with the big four firms.. Bain and Co‟s India chairman Ashish Singh is on its global board and another Indian Savi Baweja just got off it after four years. at least 8 lead Asian and global practices. In India. we will help them set up the organisation structure. the Big Four have more than 8. Barry Salzburg.globally. like when Hindusthan National Glass acquired a German company Agenda Glas. Big Four vs the Consultants In a recent interview. And the wider bouquet of services the Big Four have also come in handy. the Asia Pacific chief. Hindusthan National Glass. the CEO of accounting major Deloitte said that if its audit and consulting businesses keep growing at 2012 rates. all added together. Now. At BCG. KPMG for strategy validation. Janmejaya Sinha. Deloitte Touche Tohmatsu. Saurine Doshi has been on the global board for three years. “We serve the entire spectrum.
.” says Sunil Chandiramani of Ernst&Young. they work with middle management as most of the work is heavily execution led. from IT implementation to shared services to risk management to even forensic services. The consulting arms of the Big Four differ in many ways. they are much more affordable with rates up to 30-50% lower than the big boys of consulting. Second. they offer a wider range of services.clients acknowledge that. First. Third.
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